If you have decided that a guarantor loan is a good choice for you, then you will need to make a big decision. You will need to decide who will be your guarantor. You will need to find someone that fits certain criteria and this can be tricky. Knowing what the criteria is will be a start but then you need to find out whether the people you are hoping might help you will fit into these criteria.
They have a good credit record – You may not know whether people you know have a good credit record and they may not even know themselves. It could be worth finding out how to look up credit records so that you can check. You will not be able to look at theirs as the information is private but if you look up your own you will then be able to know what the process is and get them to try it to see what theirs is. They may know of course, but if they do not then it could be a handy way to find out. You may be wise to also ask the lender about their expectations with regards to credit records. They may have certain criteria that they need the guarantor to fit in to and if you know what these are then it will be easier for you to check whether your choice of guarantor will be suitable.
They have enough money to cover the repayments if needed – just because they have a good credit record, it does not mean that someone will have enough money to be able to cover those repayments. It is possible that they may have to pay every repayment for you and although you will not want this to happen it is best to plan for this. Therefore, you will need to talk to them about how much you expect the repayments to be each month, how long the loan will last for and whether they will be able to afford to pay for it. This can be a difficult conversation to have as you will not want them to imagine that you may never be able to pay and you will also want them to be happy to agree to it. They might not if they think that you will not be making any effort to repay. You will therefore have to explain that this is a worse case scenario and that you are really hoping that you will be able to make all of the payments but you need to make sure that they are able to pay them if necessary.
They are willing to help you out – you will also need to find someone that will be willing to help. You will find that some people may not do this. It could be that they feel that they could get into financial trouble if they do help you or they may just not have enough money available to be able to do it. There may also be other issues. They may not like to lend money at all, they may feel it might cause jealousy or they might worry that it will impact your relationship. The biggest problems are likely to be if you miss a repayment and they have to pay it, what happens then? You will need to decide whether you will pay them back for that and when you will pay them back. It might be wise to have this discussion before they sign up to anything. It might be wise for you to agree to pay them back but think about a suitable time. This might need to be once you have finished repaying the loan as while you are repaying it, you will need to make sure that you have enough money for those repayments.
This can be a lot trickier than you might think and you will need to give it some serious thought. You might even need to come up with a list of people and ask each one in turn to see whether they will be able to help you. Compiling the list can be tricky as well as you may not really know who to choose. You could chat about it in front of people you think might help and they might volunteer but not everyone is like this and they may wait to be asked. You will need to think about how you will ask them as well, to convince them that it is a good idea and that it will really help you out. Some people might be far more willing than others and it might be that you will have to work hard with some. This might be off putting and you might feel that you would rather ask someone that you think is more likely to agree to it.Read More